Archive for the 'Brand management' Category

Target’s brand position: We’re easy

Target is focused on “ease of shopping” as it refines its brand equity. My question (from RetailWire)…is it a credible claim, and can Target really sustain a competitive advantage here? Here’s my comment:

What makes Target “easier” than Walmart or Amazon? It’s a good tagline but is it supported by the facts? Target has a reputation for stockouts and other supply chain issues that a slogan by itself won’t cure. The company has a lot to prove, especially in light of Walmart’s laser focus on the same issue. Case in point: The new Walmart ad where the dad drives through in his PJ’s to pick up breakfast-in-bed fixings.

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Inventory management? It depends on the inventory

I commented recently (on RetailWire) about the skill set needed to manage different kinds of inventory. There is no hard and fast rule, because it depends on whether the store in question is in the “staple” or “fashion” business:

Any store needs to hit the right balance between staple, fashion and fad merchandise. (The difference being that “fads” have a much shorter life span unless they evolve into fashion trends with more staying power.) The question of “the right balance” really depends on the nature of the retailer’s brand image and target customer. Clearly Forever 21 needs to play in a completely different world than (say) Chicos — which is not devoid of fashion but is more dependent on staple inventory.

It’s a key question because the product life cycle of each type of merchandise — and the inventory management needed to get into and out of trends profitably — may be totally different for fads, fashion and “basics.” Retailers don’t want to be stuck with too much of a fast-moving fad; on the other hand, they don’t want to erode their in-stock levels on basics by fixating on chasing trends.

Value perception not tied to discounting

Retailers who assume that customers’ value perception is based on “Did I get the best price?” are making a strategic mistake. Here’s a recent RetailWire comment on the topic:

Whether “discount” is part of your brand DNA, “value” needs to be. But don’t confuse one with the other — customers’ value perceptions may not be shaped by whether your store has the lowest price. It’s really about whether they are paying a fair price (in their minds) for the goods and services received, so “lowest common denominator” is not always the right answer.

Once you make the distinction between value and discount, I do agree that “convenience” is a common thread across all kinds of retailers. But what constitutes convenience? For some stores, it might be a saturation approach to their location strategy (think Starbucks or Walgreens). For others, like Nordstrom with fewer locations, it might involve everything from free shipping to the 24/7 curbside pickup that they are testing this holiday season. The Amazon model doesn’t fit all circumstances, but Amazon has clearly raised shoppers’ expectations.

Applying the “4 P’s” to the Amazon model

One of the oldest tenets of marketing and retailing theory is the importance of the “Four P’s” — product, price, place, and promotion. RetailWire panelists recently discussed how to apply these principles to a game-changing retailer like Amazon. Here’s my take:

The discussion of the “four P’s” makes sense as far as it goes — and it rightly points out that assortment is more important than price to the Amazon customer. But there are other secrets to Amazon’s success that deserve at least as much attention.

First, Amazon’s predictive technology does an industry-best job making purchase recommendations based on shoppers’ past buying and browsing behavior. Second, Amazon has created an Apple-style “ecosystem” (from the Kindle to the Echo) enabling its own hardware to drive e-commerce sales. And, finally, Amazon’s TV advertising does a great job creating an emotional connection between the company and its customers.

All of these points would mean little if Amazon didn’t execute well. The level of trust between Amazon and its customers may be the most important brand-building exercise of all.

Can low prices alone drive loyalty?

Not for the first (or last) time on RetailWire, panelists engaged in a conversation about whether low prices or compelling sales can make or break retailers’ loyalty programs. I think there’s a lot more to it:

Most retailers’ so-called loyalty programs are little more than extra discounts layered on top of existing sale prices. It’s a transactional approach to the business, if you believe that true loyalty is developed by moving customers from “satisfied” to “committed.” And it’s the easy way out.

A value-oriented retailer will argue that deeper discounts are part of its brand equity — which may be true — but this is not the same thing as building an emotional connection through great content, execution and service. If anybody thinks that Amazon has built brand loyalty (among Prime members and others) strictly on the basis of competitive prices, they are missing the point of everything else Amazon is trying to do.

Sears to sell Kenmore through Amazon

“If you can’t beat ’em, join ’em” seems to be the theme of Sears Holdings’s latest decision. It will be selling Kenmore-branded appliances through Amazon, as the online giant expands its footprint into new categories. Here’s my take, from RetailWire:

If Sears’s goal now is to monetize its assets, then the decision to sell its Kenmore brand through Amazon was a good one. Kenmore, after all, is the strongest brand left in the Sears toolbox. And the Alexa tie-in is smart, too, no matter whether it originated with Amazon or Sears (or its appliance suppliers).

But the move raises a white flag, too: It signals that Sears’s own physical and online footprint is barely relevant anymore. If you can buy a Kenmore dishwasher from Amazon (including delivery, installation and warranty service), why would you bother finding a Sears store as it continues to shrink its store count?

Why did Walmart acquire Bonobos?

In case you missed it (among the front-page coverage of Amazon and Whole Foods), Walmart acquired men’s online retailer Bonobos last week. RetailWire panelists weighed in on the pluses and minuses of the move, and here’s my take:

The news about Walmart and Bonobos was overshadowed by the Amazon headline on Friday, and understandably so because of the sheer scope and boldness of the Whole Foods acquisition. But Walmart’s news deserves some attention on its own.

This is another case where Walmart is buying a brand that offers more digital expertise and product development skill than the company appears able to build on its own. But there is a disconnect between Walmart’s brand image and the customers who are shopping Bonobos today. Chances are good that the majority of Whole Foods customers are already Amazon Prime members too. How much overlap exists between Bonobos and Walmart, and will the association with Walmart chase away Bonobos’s most loyal consumers?


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